Business of Today

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Introduction: Section 2(13) of company’s act defines a director may be defined as a person having control over the direction, conduct, management, or superintendence of affairs of a company. Any person in accordance with whose direction or instructions, the board of directors of a company is custom to act is deemed to be a director of a company. Section 2 (6) of the company’s act states that the directors are collectively referred to as board of directors are simply the borad. Directors being pillars of corporate governance (Cowan, 2004) should at all times act honestly and use reasonable diligence in the discharge of their duties. This is more so in light of recent major corporate issues like ENRON & Worldcomm in the United States…show more content…
Section 4 of the Companies Act 1965 stated that the director of a company is a person who is chosen to be the directors or alternate directors apart from the given name upon on their position (Rachagan, 2002). Director is not just only a person that formally selected to the office. Even though they are not validly appointed, the s4 of the Act can as well consider certain persons to be directors, but only if the contrary intention appears. One of the duties that company directors need to comply with is fiduciary duties. This is so as company directors are said to be in a fiduciary relationship with the company. When directors are in a fiduciary relationship with the company, they are prohibited from doing any acts deemed prejudicial to the company. In other words, by applying the judgment in Hospital Products Ltd v United States Surgical Corpn, directors cannot and should not use his position to receive personal gains. The traditional view is that the directors owed a fiduciary duty to the company. This is the reason why directors are prohibited from receiving personal gain from their status as directors in a company. The nature of the relationship i.e. fiduciary relationship between directors and a company rendered the directors to act for the best interest of the company. This point can be supported by looking at Section 132(1) of the Companies Act 1965 which states that a director must act in bona fide when exercising his powers for a proper purpose and
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